When the future looks uncertain, what can you do to prepare and strengthen your business?
Recent times have shown us that the future path of your business can change in an instant – often due to influences that are beyond our own control.
The Covid-19 pandemic and the ongoing global economic recession have both had a negative economic impact on the business world. This means that when a downturn strikes, you need to be ready.
The key is to be prepared, have a ‘Plan B’ and to react in a proactive way to the uncertainty. But what elements of your business should you focus on to get your downturn plan ready?
How to keep your business afloat
To keep your business afloat, you’ll need to be agile, innovative and resourceful. Being flexible in the face of adversity is also likely to play a big part in your survival.
No business owner has all the answers. There are some important steps to take if you’re going to overcome the challenges of a downturn and stop your business from declining.
Proactive steps to take will include:
* Enhancing your business knowledge – knowledge is power, and being in control of your business data gives you that knowledge.
* Improving your cashflow – during a downturn, money will be tight and your cashflow position is likely to be poor. To improve this, you need to be proactive about reducing overheads. This means bill your clients promptly and regularly and having processes in place to follow up on overdue invoices.
* Negotiate with your suppliers – if you can negotiate a better deal from your suppliers, this can go a long way to enhancing your cashflow position even if this is simply extending your payment terms. Also try talking to your landlord about a reduction in rent – or even a rent holiday.
* Accessing additional funding – when your cash reserves get tight, there may be a need to look for additional funding. This could mean asking for an extended overdraft or selling excess or unused assets. You could even consider reviewing staff annual leave balances to ensure staff have taken holidays and are well rested.
* Evaluating your market offering – to generate enough revenue to survive, it may be worth evaluating the products you offer and making some changes. Do some products deliver a much higher return than others? If you do, you could consider focusing purely on these products and having a tighter and more profitable product range.
* Evolving your marketing and sales – communication with your customers during a downturn is vital. Stay in contact with your customers by letting them know that your products/services are still there for them and this will ensure that your business remains front of mind. Re-evaluate your marketing channels to make sure you’re hitting the right audience and your advertising is providing you with a return.
* Learning to pivot and diversify – some sectors will likely be affected far greater than others during a downturn – for example, the travel and hospitality sectors were badly hit by Covid. If this happens, you may need to pivot into a new sector to find a new audience and revenue stream. You can also look at diversifying your product range to meet the needs of a wider range of customers, this will help bring in more revenue streams and bumping up your cash position as a business.
It’s all about having that Plan B in place, that way when the next downturn hits, you’re primed and ready to respond.
Talk to us about getting the specific business advice you need.
The better prepared you are, and the faster you react, the more likely it is that you’ll ride out a downturn successfully.
If you’re looking to improve your business planning, upgrade your disaster management plan, or improve your financial model, do come and talk to us.